Tax Issues

If you have become disabled there can be several tax issues that come into play. Tax law provides various types of assistance and support to disabled taxpayers.

The Tax Return

If you or a dependent are unable to complete a tax return due to a disability it will have to be completed by someone else. If legally capable you can fill out tax form T1013 – Appointing or Cancelling a Representative, which would allow that person to fill out the form.

Defining Disability

There are various tax benefits available when an individual is considered disabled. To receive these benefits a Disability Certificate will have to be filed with the tax authorities (The Canada Revenue Agency (CRA)). The Income Tax Act has guidelines as to what qualifies as a disability and you should approach a qualified medical practitioner and have them complete form T2201.

Various tax deductions and credits may be claimed by the disabled person or, in some cases, their legal guardian. The rules relating to these benefits can be rather complex and they are interrelated. Here is a brief overview. Your advisor can provide you with some additional information but you should consult a qualified tax professional when planning to make claims.

The Attendant Care Deduction

If you meet the definition of disabled and require the services of an attendant to enable you to work, you may be able to claim some or all of the costs of the attendant. The attendant must be at least 18 and not a spouse. The deduction cannot be claimed where the expenses were claimed for the Medical Expense Tax Credit (explained below).

Disability Tax Credit

This credit is available for disabled persons and is 15% of $8,416 or $1,262.40 for 2019. The credit can be transferred in certain cases. Provincial credits are also available.

Medical Expense Tax Credit

A credit for medical expenses not covered by other sources is available. The amount of the credit is for expenses in excess of the lesser of $2,352 or 3% of the person's net income in 2019. The credit can be transferred in certain cases. Provincial credits are also available.

Registered Disability Savings Plans (RDSPs)

RDSPs are savings plans intended to provide long-term financial support for the disabled. A disabled and legally competent adult can set up a plan, or one can be established on behalf of a disabled minor. The lifetime contribution limit is $200,000 and the contributions can be made by anyone. Although the contributions are not tax deductible, the assets will grow tax-sheltered within the plan. The government provides financial assistance through Disability Savings Grants which match contributions within defined limits. There is also financial assistance available to low income families through the Disability Savings Bonds. Your advisor will have more information on the details of the RDSP.